Lau Siu Wing v. Wong Hong and Others
Read the full judgment text of HCA 10779/1998 on BabelCite. This High Court CFI judgment was delivered on 22 December 2001.
1. This action is related to the purchase of a residential unit in Hang Tau Village, Sheung Shui, New Territories (" the suit property ").
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HCA010779/1998 HCA 10779 /1998 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 10779 OF 1998 __________
__________ Coram: Hon. Chung J in Court Dates of Hearing: 24 to 27 September 2001 Date of Handing Down Judgment: 22 December 2001 _______________ J U D G M E N T _______________ Introduction 1.This action is related to the purchase of a residential unit in Hang Tau Village, Sheung Shui, New Territories ("the suit property"). 2.The plaintiff was the purchaser. According to the Re-Amended Statement of Claim, the 3rd defendant ("Fung") was the registered owner of the suit property. Further, the 1st Defendant ("Wong") signed a provisional agreement dated 3 July 1997 with the plaintiff as the beneficial owner and developer of the suit property ("the provisional agreement"). The plaintiff avers that the sale and purchaser should include the suit property and a garden of about 300 square feet ("the garden"). 3.The 2nd defendant was the estate agent who procured the signing of the provisional agreement by Wong and the plaintiff ("the agent"). 4.The plaintiff claims that Wong/Fung breached the provisional agreement and that the agent breached its duties as his agent. Leave to The Agent to Re-Amend 5.On the first day of trial, the agent applied for leave to re-amend his Amended Defence. I granted leave to the agent to re-amend his pleading indicating that reasons for doing so would be given later. 6.The most substantial proposed re-amendments were set out in:-
7.The plaintiff objected to the application principally on the following grounds:-
8.Even if the proposed para. 1A(b) and (d) should amount to a withdrawal of an "admission", and even if the normal practice is that evidence should be filed to support the application to withdraw, the so-called "admission" only concerned the way in which the terms in a written contract were to be construed. It was thus only related to a point of law. I infer that the application to re-amend this part of the pleadings resulted from a change of the legal advisers' view as to the proper meaning of those terms, and not any change in the agent's factual case. Indeed, no such evidence was adduced or relied upon by the agent. The plaintiff has properly not argued that the original plea constitutes a bar or estoppel which should prevent the agent from raising the new issue. It has not been argued that allowing the "admission" to be withdrawn would be unjust or unfair to the plaintiff: Hong Kong Civil Procedure 2001, para. 27/3/9. In these circumstances, I do not find the plaintiff's argument in sub-para. (1) above to have substance. 9.As regards the plaintiff's argument in sub-para. (2) above, the plea of an implied term already appeared in the Amended Defence. Further, because no new or additional evidence will be adduced by the agent regarding the plea at para. 1A(d) of the draft, this plea will most likely stand or fall with that set out in para. 1A(b) of the draft re-amendment. Since I already decided to grant leave to the agent to rely on para. 1A(b) of the draft, no prejudice will likely be caused to the plaintiff by allowing the agent to put forward this plea of an implied term. 10.As regards the lateness of the application for leave, the plaintiff has not argued (and there is nothing to suggest) that the application would cause the plaintiff irreparable prejudice which cannot be compensated for by costs. At one stage, plaintiff's counsel indicated that the plaintiff might ask for an adjournment if leave to re-amend was granted to the agent. However, no such application was in fact made. Issues Raised by the Pleadings 11.The plaintiff alleges that Wong was not in a position to sell the suit property or the garden to the plaintiff because Wong was not the owner. Further, the vendor (be it Wong or Fung) failed to convey good title to the suit property because:-
12.The plaintiff alleges that the agent, through his staff (Mr. Tony Wong and Ms. Anna Lam (respectively "Tony Wong" and "Anna Lam")), breached his duty by misrepresenting that the garden would be sold together with the suit property. The plaintiff at one stage thought that Anna Lam was called Anna Wong but nothing material turns on this. (a) Wong/Fung 13.Wong/Fung's defence can be summarised as follows:-
(b) The Agent 14.The summary of the agent's defence (set out in the Amended Defence) is:-
15.The Re-Amended Defence raises the additional defence set out under the heading "Leave to the Agent to Re-Amend". Issues Raised at Trial 16.The issues which need to be determined by the end of the trial have been set out in the respective written final submissions of the parties. They will be dealt with under the headings and sub-headings below. As can be seen from the discussions below, some of the issues raised at trial go beyond those raised in the pleadings. On the other hand, some of the pleaded points are no longer relied upon at the end of trial. 17.The credibility of witnesses is important to the determination of many of the issues. To avoid any doubt, although the witnesses' credibility is dealt with from time to time under separate headings or sub-headings below, I have borne in mind the need to consider credibility from an overall point of view. I also bear in mind the need to consider the totality of the evidence adduced at trial when considering this matter. Should Wong/Fung be Liable? 18.This will be dealt with under the sub-headings set out below. For the reasons given below, I conclude that pursuant to the provisional agreement, Wong/Fung should give good title both as regards the suit property and the garden. The defence does not contend that Wong/Fung could give title to the garden. They are therefore in breach of the provisional agreement. (a) Was Wong Able to Sell? 19.Although it has not expressly been abandoned, the complaint that Wong was not the owner of the suit property or the garden no longer appears in the plaintiff's written final submission, nor was the point referred to by plaintiff's counsel in court. 20.In any event, insofar as this matter is still relied upon by the plaintiff, I find that it has no substance. Wong's obligation under the provisional agreement was to convey the suit property (whether together with the garden will be dealt with below) at the time of completion. The circumstances of this case, such as Wong and Fung were all along represented by the same firm of solicitors and that the draft formal agreement named Fung as the vendor, show that it is highly probable that Wong would have been able to procure Fung to convey the suit property (the position regarding the garden will be dealt with below) by that time. (b) Did the Sale Include the Garden? 21.In order to understand the parties' respective arguments (and therefore the issues) relating to this aspect, the background facts need to be set out first; this will be followed by other matters under the sub-headings below. The Previous Sale 22.The provisional agreement for the previous sale was dated 11 March 1997 and was a Chinese pro forma document of the agent. It was signed by the plaintiff's wife and related to a development project called "Bo Shu Garden" (寶樹花園). The following part is relevant to this aspect:-
The translation of the above (provided by the parties) is:-
The underlined parts were originally blank spaces for details/particulars to be filled in. The characters which now appear at those spaces were filled in by hand by the agent's staff. 23.The previous sale is said to be relevant to 2 matters:-
The Provisional Agreement 24.The provisional agreement is also a Chinese pro forma document of the agent. It was related to the sale of a unit in a development project called "Golf View Garden" (嘉芙花園). The part relevant to this aspect is:-
The certified translation of the above is:-
Similarly, the underlined parts were originally blank spaces for details/particulars to be filled in. The characters which now appear at those spaces were filled in by hand by the agent's staff. Testimony Regarding the Signing of the 2 Agreements 25.The parties' testimony regarding the signing of the agreement for the previous sale is essentially undisputed. The witnesses' testimony about the signing of the provisional agreement, however, puts forth different versions of fact (summarised below). The plaintiff's witnesses regarding this were himself and Ms. Fung Sze Wai, his wife ("the plaintiff's wife" or "his wife" as appropriate). The agent's witness regarding this was Lam So Mui (that is, Anna Lam). The agent also testified. 26.The background relevant to the previous sale and the sale involving the suit property can be summarised as follows. According to the agent himself, he was not present when the plaintiff signed the 2 respective provisional agreements in question. He was the one who obtained the business from Wong for becoming the agent for selling some of the units in Hang Tau Village. He understood from Wong that purchasers of the units would only be given a right to use the gardens but no title would be conveyed. The agent's Chinese pro forma agreements reflected that understanding, namely, they expressly referred to the right to use the land by stating:-
Further, it is the agent's case that Tony Wong has left his employment with the agent and cannot be located. 27.In relation to both transactions, Wong and his brother (Wong Tai Raymond) ("Raymond Wong") both testified that the agent's staff who they contacted in relation to the sale of the units in Hang Tau Village was mainly Tony Wong. They said that Tony Wong was well aware that the garden should not be included in the conveyance (in the sense that no title was to be conveyed). The last statement was confirmed by the agent's testimony. 28.In relation to the previous sale, it is common ground that Tony Wong prepared the provisional sale and purchase agreement before it was signed by the plaintiff's wife and the vendor respectively. The subsequent conveyance was uneventful. The related formal agreement and assignment were duly executed by the plaintiff and the vendor. 29.In relation to the suit property, according to the witness statements of the plaintiff and his wife, the plaintiff was interested in buying a unit in a village house in mid-1997. The couple went to view some units in Hang Tau Village, Sheung Shui and was brought by Anna Lam to view the suit property. Anna Lam told them the suit property included the garden. The plaintiff was attracted by the garden and told Anna Lam about this. Anna Lam then told the plaintiff she would confirm with the owner to ensure that the suit property would be sold together with the garden. After viewing the suit property, the couple and Anna Lam went to the agent's office. The couple was attended to by Tony Wong. Tony Wong told them he would telephone Wong and ask whether the garden could be sold together with the suit property. After a telephone call, Tony Wong told them there was no problem. The plaintiff's wife was cautious and asked Tony Wong to specify the sale of the garden clearly in the provisional agreement. 30.According to the witness statement of Anna Lam, she was on duty at the relevant time. She agrees that the plaintiff viewed the suit property but she denies that there was any warranty, representation or undertaking being given by her or by anyone else in her presence. During the trial, Anna Lam testified to the effect that:-
31.Both the testimony of the agent's witnesses (including the agent himself) and the previous sale show that Tony Wong was fully aware of Wong's instruction that no title to the garden would be conveyed to the purchasers. That must have been the reason why Tony Wong wrote:-
in the provisional agreement for the previous sale. However, in relation to the suit property and the garden, Tony Wong put down in the blank space:-
32.The reference to "First Floor" may well have been a mistake. But the inclusion of the garden in the description of the property to be sold (coupled with the crossing out of the space for inserting the area for the right to use land) is inconsistent with the agent's case that no undertaking, warranty or representation has been made to the plaintiff. Instead, it supports the plaintiff's case. In particular, I do not find Anna Lam's testimony at para. 30(b) above to be credible because the assertion has not been made in her witness statement. The defence testimony did not explain why the provisional agreement was prepared by Tony Wong in a way different from the previous sale. 33.By reason of the above matters, I accept the plaintiff's evidence regarding this point and reject the defence evidence insofar as it conflicts with the plaintiff's said evidence. Post-Provisional Agreement Correspondence between Solicitors 34.In law, words and acts of contracting parties subsequent to the contract are not admissible for the purpose of construing the meaning of the terms of the contract: Chitty on Contracts (1999) 28th Ed., para. 12-124. They are however relevant to the credibility of the witnesses' testimony. 35.The related correspondence in question lasted from about 26 November 1997 to about 16 January 1998. The more important ones can be summarized as follows. 36.A draft formal sale and purchase agreement ("the draft S & P agreement") was enclosed with a letter dated 26 November 1997 from Wong/Fung's solicitors. The second schedule of the draft S & P agreement sets out the description of the property to be conveyed:-
37.By a letter dated 19 December 1997, the plaintiff's solicitors returned the draft S & P agreement. The only addition to the above description was:-
38.Nothing further was mentioned about the garden until the letter dated 23 December 1997 from the plaintiff's solicitors:-
39.By a letter dated 31 December 1997, solicitors for Wong/Fung stated in short that it was originally intended that the right to use the respective portions of garden would be granted to all owners but that was not feasible because the building licence to one of the lots had not been complied with. 40.In a letter dated 16 January 1998, the plaintiff's solicitors said:-
41.Wong/Fung argue that the above line of correspondence shows that the plaintiff was not concerned with whether the garden was included in the conveyance. I do not agree. It is common ground that the reference to "the Court-Yard" in the above letters was a reference to the garden (see especially the addition of the words "of about 300 sq. ft." by the plaintiff's solicitors to the "Court-Yard"). The description set out in the second schedule was expressed in a way commonly used by conveyancers in Hong Kong to convey title to the purchaser. It is not (and cannot be) disputed that the part of the second schedule regarding:-
was for the purpose of conveying title together with the sole and exclusive right of possession of the suit property to the plaintiff. Such being the case, when the second schedule also stated that:-
the title and sole and exclusive right of possession of the Court-Yard (meaning the garden) was also to be conveyed to the plaintiff. Alternatively, if such provision did not in fact intend to convey such title, on a fair reading of the second schedule it is at least capable of having such meaning. 42.In view of the above, I do not find the response of the plaintiff's solicitors in the subsequent correspondence to be inconsistent with the plaintiff's testimony or evidence that the parties intended that the garden was to be sold together with the suit property. Arguably at least, the second schedule in the draft S & P agreement supports the plaintiff's case. 43.Post-provisional agreement tape-recorded conversations between the plaintiff and Wong were relied upon by the defence. I consider that they were in the nature of without prejudice discussions. No admission was made therein by either party nor was there any matter which is sufficiently clear and unambiguous to advance either party's case in this action. Was the Garden Included? Reasons & Conclusion 44.This is essentially a question of construction of the terms of the provisional agreement. Before going into the details of this issue, it is useful to remind ourselves of the relevant general principles. They were set out in the ICS Ltd. case at pp. 912-913 and read as follows:-
45.It is trite law that an objective test is to be adopted when the court ascertains the parties' intention by construing the true meaning of the contract terms: Chitty, para. 12-043. 46.As stated above, I accept the plaintiff's evidence regarding the circumstances under which the provisional agreement was signed. Taking into account (1) the way in which the property to be sold was described in the provisional agreement and (2) the circumstances surrounding its execution, I conclude that the parties intended the suit property was to be sold together with the garden and Wong/Fung have agreed to convey good title to both to the plaintiff. Further, the agent has (through Tony Wong and Anna Lam) represented that the garden was included in the sale. 47.Having so concluded, it is unnecessary to consider the subtle point raised by the plaintiff as to whether Wong/Fung were in a position to give a legally binding licence regarding the garden which will bind the licensor's successors-in-title. (c) The Plaintiff's Mistaken Belief 48.By reason of the conclusion above, there is strictly no need to deal with this point. I shall do so for completeness. 49.The plaintiff also relies on the doctrine of mistake if the court should find that the provisional agreement did not provide for the garden to be sold together with the suit property. When questioned by the court, plaintiff's counsel clarifies that he relies on the unilateral mistake on the plaintiff's part as to the terms of the provisional agreement. He also confirms that no reliance would be placed on the doctrine of non est factum. 50.This point only arises if and when the court has accepted the defence case regarding the circumstances under which the provisional agreement came to be signed by the parties. In other words, the finding would have to be that the parties did not intend the garden to be included in the sale, that the plaintiff did not specifically request it to be included and there was no misrepresentation by the agent. 51.A unilateral mistake as to the terms of a contract can only be set up if the mistake is known to the other party: see Chitty, para. 5-034 to 5-044, especially at para. 5-034. If I should find in favour of the defence (as stated above), there would have been no evidential basis to support this part of the plaintiff's case. (d) Requisition on Title 52.At the end of the trial, the plaintiff only relies on 1 requisition on title. As I already found in the plaintiff's favour, this point is only discussed for the sake of completeness. The requisition arose as follows. In a Succession to Property (Memorial No. 98258), one Li Sz Fung and one "Li Fuk Chuen" succeeded to the suit property. In a Succession to Property (Memorial No. 160150) Li Sz Fung succeeded 1/2 share of and in the suit property from a "Li Fuk Tsun". 53.In a letter dated 3 December 1997, the plaintiff's solicitors asked Wong/Fung's solicitors whether the 2 names belonged to the same person. 54.Solicitors for Wong/Fung replied on 23 December 1997:-
The reference to "TUEN" was probably an error because the name in Memorial No. 160150 was "TSUN". 55.On 30 December 1997, the plaintiff's solicitors asked for documentary proof that the 2 names were one and the same person. 56.In their letter of 3 January 1998, Wong/Fung's solicitors relied on the fact that both documents were issued by the District Land Officer who must have been satisfied that the 2 names referred to the same person. The solicitors also relied on the Limitation Ordinance and stated that any claims would have been barred because it accrued for more than 20 years. 57.The plaintiff's solicitors did not desist. From 16 January 1998 onwards, the parties' solicitors also disagreed on whether Memorial No. 160150 constituted the intermediate root of title. 58.Finally, on 20 February 1998, solicitors for Wong/Fung wrote:-
59.On 23 February 1998, before the reply from the District Office, Tai Po was received, the plaintiff terminated the provisional agreement. 60.On 13 March 1998, Wong/Fung's solicitors enclosed a certified copy of the letter dated 4 March 1998 from North District Office. The enclosed letter reads:-
The reference to "Fuk-chun" should have been "Fuk-chuen". 61.The plaintiff relies on Chudai (HK) Development Co. Ltd. v. Portia International Ltd. [1992] 1 HKLR 350. The discrepancies in that case were (a) the name "Madam Lam Chun" in one document and "Madam Lam Chun alias Lam Yin-chor" in another, and (b) the name "Yip Yee" in one document and "Yip Yee alias Chan Yip-sang" in another. The court held that:-
62.The last observation (above) of the court in the Chudai (HK) Development case applies equally to this action although the facts herein are dissimilar. 63.The factors in favour of Wong/Fung are:-
on the other hand,
64.This is a borderline case but, bearing in mind the high standard of proof a vendor needs to surmount when proving his title, I cannot be satisfied that there is no reasonable doubt arising from the differently spelt words. 65.Hence, even if the letter from North District Office had been sent to the plaintiff before 23 February 1998, the requisition would still have not been sufficiently answered. (e) Was There Conduct Amounting to Affirmation/Estoppel? 66.In the Re-Amended Defence and Counterclaim, Wong/Fung rely on the following matters regarding this point:-
67.I agree with the plaintiff's argument that conduct occurring before the discovery of the lack of title over the garden by the plaintiff cannot properly be considered as acts of affirmation, waiver or estoppel: a person can only affirm or waive (or be estopped) if he acts in a certain way after he became aware of the true state of affairs. 68.In relation to the plaintiff's conduct since, or was concurrent with, the time of the correspondence passing between the parties' respective solicitors, I do not see how a person's conduct can be said to amount to affirmation or waiver (or estoppel) when at the same time his legal advisers were insisting on his rights resulting in disputes over matters which included Wong/Fung's ability to give title as regards the garden. 69.For the above reasons, I do not find there is sufficiently clear and unambiguous evidence to show that the plaintiff's conduct amounted to any waiver or affirmation of the provisional agreement. 70.The same reasons and conclusion also apply to the plaintiff's alleged part performance of the provisional agreement and/or estoppel. Should The Agent be Liable? 71.For the reasons given above under the heading "Should Wong/Fung be Liable?", I conclude that the agent has breached its duty by misrepresenting to the plaintiff that Wong/Fung were in a position to give good title as regards the garden. The agent is accordingly liable. 72.In fact, the agent admitted in his testimony that it is the duty of an estate agent to properly inform his client the true nature of a property. 73.When considering the credibility of the plaintiff's witnesses, I have borne in mind the agent's allegations that:-
For the avoidence of doubt, I accept the testimony of the plaintiff's witnesses and reject that of the agent's witnesses insofar as there are inconsistencies between the two. 74.I reject the agent's argument that he was only the agent of Wong/Fung and not the plaintiff's agent. The agent was entitled to be paid commission by the plaintiff under the terms of the provisional agreement. Cheng Kwok-fai v. Mok Yiu-wah, Peter and Another [1990] HKLJ 440, 445E-G (a case relied on by the agent) was concerned with different facts and issues and cannot assist the agent in this action. 75.The plaintiff in the Cheng Kwok-fai case was the purchaser. He sued the vendors but not the estate agent. The plaintiff claimed that the area of the flat (the subject-matter of the action) was misstated to be 950 square feet (in fact 855.69 square feet) in a sketch of the flat given to him by the estate agent. In those circumstances, the court held that the representation in the sketch was not made on the vendors' behalf. 76.In the present case, there is direct evidence that the agent was fully aware of the true extent of the vendor's title. The pro forma provisional agreement was drafted by the agent with that in mind. In such circumstances, there is ample support in law that it was part of the agent's duty (whether in contract or in tort) not to misrepresent the true extent of the vendor's title to the purchaser (the plaintiff in this action). Whether the area of the Lot was more than sufficient to provide for the garden (see para. 14(c) above) is irrelevant to the agent's liability. Counterclaim of Wong/Fung 77.By reason of the matters aforesaid, this should be dismissed. If it were necessary to make an award, I agree with the plaintiff that because no evidence on loss has been adduced by Wong/Fung, they should only be entitled to nominal damages. I assess this to be $1,000. Relief / Quantum of Loss 78.Quite a number of the relief sought in the prayer for relief are either declaration orders or orders in the nature of declarations. Plaintiff's counsel does not insist on obtaining these orders. In view of the monetary award made below, I do not consider it necessary to grant those orders. 79.By virtue of the conclusion reached in regard to liability, judgment will be entered against Wong/Fung in the sum of $440,000 being the amount of deposit paid under the provisional agreement. There will also be a lien for the said sum together with interest thereon against the suit property. 80.The plaintiff also claims damages for the breach of the provisional agreement. It is well known that the real property market has fallen since the date of the provisional agreement. No evidence has been adduced as to show what damages have been suffered. No award will therefore made. 81.In relation to the plaintiff's claim for expenses incurred in decorating the suit property ($135,600 and $16,500), I agree with the argument of counsel for Wong/Fung that the documents produced were only quotations. There is no evidence of payment having been made. For this reason, this claim is also not allowed. 82.The plaintiff also claims damages against the agent. The only damage which the plaintiff has proved is the payment of the deposit of $440,000. Judgment will also be entered against the agent for this sum. The agent should also return the commission of $22,000 to the plaintiff because the plaintiff would not have entered into the provisional agreement if the true facts had been disclosed. 83.Interest on the said awards should be at judgment rate from the date of writ to the date of judgment and thereafter also at judgment rate until payment. Costs 84.There is no apparent reason to justify departing from the usual rule that costs should follow the event. There will accordingly be a costs order nisi pursuant to RHC Ord. 42 r. 5B(6) that the costs of this action (including the costs of Wong/Fung's counterclaim as between the plaintiff and Wong/Fung) be paid by the defendants to the plaintiff to be taxed if not agreed.
Representation: Mr Kenny C P Lin, instructed by Messrs C. P. Cheung & Co., for the Plaintiff Ms Lisa D'Almada Remedios, instructed by Messrs Norman M. K. Yeung & Co., for the 1st and 3rd Defendants Mr Louie Chan, instructed by Messrs Ko & Chow, for the 2nd Defendant |
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